The total amount of bad debt held by Spanish banks rocketed to €107.17bn (£89.6bn) in December last year – the highest level since 1995 – according to figures released by the Bank of Spain.

This increased the Spanish banks non-performing loans ratio to 5.81 per cent in December, up from 5.68 per cent the previous month, as higher unemployment and the collapse of the country’s housing market meant more people were struggling to repay their debts.

The figures come shortly after banking giants Santander and Barclays both took a hit on profits from their Spanish operations.

Santander’s annual profits tanked by 8.5 per cent to £6.9bn after the bank took a £400m hit for its bad loan exposure to the Spanish property market, while Barclays posted a corporate impairment of £898m in its Spanish operations, up from £268m in 2009.